Market expects the Bank of Japan to keep interest rates unchanged, traders focus on foreign exchange intervention risks

Deep Tide TechFlow News, January 20 — According to Jinshi Data, the Bank of Japan is expected to keep the benchmark interest rate unchanged on Friday, a move that is unlikely to provide immediate support to the yen. Analysts generally expect that if the yen continues to weaken, the Japanese government may intervene in the currency market as early as the same day, keeping traders highly alert. As of Tuesday morning Tokyo time, USD/JPY traded around 158.20, not far from the 160 level, which is considered a critical line of defense — in 2024, Japanese authorities have repeatedly entered the market near this level to buy yen and support the exchange rate. An informed source revealed last week that BOJ officials are closely monitoring the impact of the exchange rate on inflation, as further yen depreciation could accelerate future rate hikes. Nomura Securities Chief Strategist Ryojiro Matsunaga said, “The Bank of Japan may hint that the threshold for the next rate hike is not high to avoid exacerbating yen depreciation. They might leave room to act as early as April.”